I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

"I'll Believe Corporations Are People When Texas Executes One": What Is This Foolishness From Robert Reich?

I have to admit to being astonished by this statement from Robert Reich. It’s as if a Berkeley professor and former Secretary of Labor has zero clue about the system he is commenting upon. Something which, if true, might explain some of the pretty pass we find ourselves in at present.

Surely someone of the Professor’s maturity in years should know that Texas executes corporations regularly? For the execution of a company is known as “bankruptcy”. It’s the extinction of corporate life through the actions of the state: that’s something we could , indeed would, colloquially describe as execution.

Here is a listing of bankruptcies in one part of Texas. The corporations in that list who are going through a Chapter 7 bankruptcy are being liquidated. “Liquidated”, as we know, being an oft used euphemism for execution.

Here is one of the places where such corporations are executed: a bankruptcy court we call it. Indeed, corporations have rather less protection from being liquidated than people do: they are tried to the standards of the civil code, not the criminal code (the simplest way of describing the difference, not entirely accurate, is to standards of proof of “on the balance of probabilities” instead of “beyond all reasonable doubt”).

OK, there’s a very small get out as it’s not the State of Texas here doing the executing. It’s the Federal courts in the State of Texas: but that’s not actually what the Professor said. Corporations get extinguished, their legal existence liquidated, all the time: they get executed.

Sadly, that’s not the only mistake made about corporate personhood in the article. Leave aside political rights and Citizen’s United, that’s politics and not my subject at all. But the basic idea of a corporation being a legal person:

But it defies logic to make BP itself the criminal. Corporations aren’t people. They can’t know right from wrong. They’re incapable of criminal intent. They have no brains. They’re legal fictions — pieces of paper filed away in a vault in some bank.

This is true, they are indeed just legal fictions, pieces of paper filed away. But why do we do this, create these legal fictions?

Justice Department just entered into the largest criminal settlement in U.S. history with the giant oil company BP. BP plead guilty to 14 criminal counts, including manslaughter, and agreed to pay $4 billion over the next five years.

We do it so that we can sue them under either civil or criminal procedures. For if there’s no legal person there then there’s no one to bring to court. An organisation (whether it be a union, a partnership, a corporation or the AARP) has to be a legal person because that’s the only way that we can, if we should wish to, drag them in front of the courts and sue them. If there’s no legal or natural person there then they cannot be sued. Because that’s the definition of who you can sue, a legal or natural person. If corporate personhood is to be abolished then never again can any corporation be sued: no not for oil spills, not for asbestos, not for tobacco, not fer nuttin’. Because, to continue being painfully and boringly obvious, this is the definition of who can be sued: a person, whether legal or natural.

And sadly it gets even worse:

Remember the accounting firm Arthur Andersen, convicted in 2002 of obstruction of justice when certain partners destroyed records of the auditing work they did for Enron as the energy giant was imploding? After the firm was convicted, its clients abandoned it and the firm went under. The vast majority of its employees had nothing to do with Enron but lost their jobs anyway. Yet the real perpetrators came out fine. Anderson’s CEO moved to a lucrative job in a private-equity firm, and other senior partners formed a new accounting firm.

Andersen was a partnership. A Limited Liability Partnership, LLP, to be sure. But all of those partners lost the entirety of their capital or equity that was in the partnership. Which, it being a partnership, was a substantial amount for each of them. Which just isn’t the same as what happens in a corporate bankruptcy, is it now?

Of course it’s possible that I’m just reading too much into this. That what the Professor says is political rhetoric rather than his considered and exact understanding of the world. But seriously, please? The idea that corporations don’t die, that the state doesn’t give them the coup de grace, execute them, is simply ridiculous. It happens all the time. And I really do think we wouldn’t like a world in which corporations were not legal people: for it would mean that we could never sue them.

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But so of course a corporation isn’t literally a person. A corporation holds many advantages over a mere individual person. A corporation doesn’t just have one mind at its disposal like an individual person does, but has many minds. With many minds and many hands, corporations can agglomerate information, assets and resources on a much greater scale than the individual person can. Shouldn’t a corporation at least be recognized as a different category of person, in order to differentiate it from the ordinary individual person? There are real-world differences between the corporation-as-person and the ordinary individual person, which mustn’t be ignored or glossed over.

of course, human corpses are not then auctioned off after execution to the highest bidder. equating human death with corporate death to support the argument that corporations deserve the same rights as citizens is not just morally repugnant. it is extreme over-reaching from any logical viewpoint. The citizens united decision needs to be rescinded by congress. It is an insane position which undermines the very foundation of our nation’s long held belief in one human, one vote.

I just want to know who is going to jail? If the corporation is pleading guilty to a crime then someone needs to be behind bars. It should start with the CEO and start working it’s way down the ladder until someone is identified as the culprit.

A corporation can’t commit a crime, only real flesh and blood people do that. The professor is simply expressing the frustration of a lot of people that crimes are being committed and nobody is getting punished.

“It does not follow from this that they should be given any of the rights that people enjoy.”

For with the ability to be sued comes along the right to sue. So that right does have to be granted to corporations. But I agree, there’s no reason why corporations should be granted *all* of the rights that a natural person has.

And please note that I only mentioned Citizen’s United (the case that everyone really wants to talk about) to pointy out that I wasn’t going to talk about that one. For that is very obviously a political decision, beyond my scope as a foreigner.

Hi – are you a complete idiot? Do you even know what Bankruptcy does? Chapter 7 – debt is able to be discharged – and that’s the ‘harsher’ of the Bankruptcy’s that can be filed by a corporation. It’s a favor to the debtor company, not a State imposed sanction/execution. You know better, liar. Go chapter 13 and Bankruptcy not only allows protection from creditors, it allows restructuring of debt in some cases and in others and allows companies to – wherever possible, to continue to exist, and Not kill them. Bankruptcy is sought out, not state inflicted. I am so sick of Righties apologizing for the husband (their irrational party) that beats them – because they are married to the wrong opinion so they perversely twist their logic until their ego is somehow sated- until their side is no longer in the morally abject.. Get this dude: The Right is WRONG as the day is long. Corporations are NOT people. While corporations cannot feel – they sure as hell CAN commit crimes – crimes like usury – crimes like destroying the environment. How can you seriously say that corporations don’t commit crimes – Enron. Tyco, Worldcom. Goldman Sachs.Ever hear of them? Not only is it immoral to recommend investments that you know are contrary to the benefit of your client – I guarantee it’s illegal. As is profiting from said recommendations. You soul-less empty man. Companies exist for one primary directive: profit. If you cannot see for the myriad of reasons how a company differs, then I’d submit you’re not much of a person yourself. Love, Pain, Joy, comfort, sorrow, excitement, patience, anticipation, compassion, empathy.. I’d spend the next few hours typing, but really – let’s see – companies seek to do one thing: profit. How much mercury can we put into the air and not be sued? If we are sued, how much is the delta between what the actuary team says it will cost to poison people, compared to the profit we squeek out ? Is there another company we can trade with, thanks to the (republican crippled) clean skies act, to help us trade CO2 credits with Mercury credits? (thus maximizing polution).. FYI – I own a company. I can assure you, IT is not a person. I am. My employees are. The decisions I make as a corporate head impact people, but IT should never have a voice in politics, no matter how large it grows. I should, the employees should and that’s where it ends. One man, one voice, one vote. Enough is enough empowering the few to have megaphones, these behemoth voices multiplied by money. Yes, screaming the wrong opinion with millions of dollars does have an impact – on the weak willed, and the easily confused. That’s not democracy. You claim you’re not political- but the consequence of what you’re discussing is nothing But that. Companies are not people; never were, never will be. You’re opinion is disgusting and revolting. It seems mild mannered, but what you suggest is beyond the pale awful. God help you.

I’m sorry – you say companies “cant define right from wrong” and it defies logic to hold BP accountable ? Sorry, so which executive is ponying up the $20B in damages to the environment caused due to their negligence?(not criminal I realize, but along the line of logic) So the problem with that is, there is no disincentive for companies to keep cheating/poisioning/stealing on a grand scale. If their only cost is one officer who will be – sorry, how many Enron execs served time? – ‘punished’? Companies must be held to criminal account, because otherwise, there will be no reason for them to avoid illicit behavior.

Once again we see, in the HSBC money laundering case, that *people* who commit crimes under the cover of a corporation are rarely held criminally accountable. Robert Reich’s pithy quote is all the more relevant. HSBC as a corporation is fined heavily, but not so heavily as to endanger its operations and survival.

This article is on the right track, but it is actually quite wrong. “Bankruptcy” is not the legal execution of a corporation. In fact, corporations often survive bankruptcy. Moreover, almost all bankruptcies are voluntary, meaning that at best the analogy would be to a suicide.

But there is an exact analog to executions for corporations—involuntary dissolution. For an explanation of that process, see this post: http://gillette-torvik.blogspot.com/2012/06/texas-executes-corporations-all-time.html Indeed, this is the penalty for a corporation in Texas that is found to have committed a felony, so the analogy to the death penalty is pretty much on all fours.

Unfortunately, since corporations operate in multiple states, they are often tried in courts that cannot involuntarily dissolve them as the state they were incorporated in is the only one legally able to revoke that document.

Basically, corporations can only face the death penalty in the state they were formed in although they can commit crimes in the other 49 without that risk. Other states only have the option of fining the corporation into a voluntary bankruptcy.

Corporations existed, went bankrupt, sued and got sued by other corporations as well as people, and made lots and lots of money before “corporate personhood” was established in 1886.

What Reich was referring to is corporations as people entitled to the protections that are established in the Bills of Rights. Were “corporate personhood” to be abolished, they would still have access to the court system, just like before it was established in the first place.

Not really. Try suing a gun manufacturer, or Mansanto. Here’s a test: since Robert Reich says he’ll believe corporations are people when Texas executes one, let’s see what happens to the West Fertilizer Co. in West, Texas. Fifteen dead, hundreds injured, a plant located right in the heart of town with 3 schools, a nursing home and a three-story apartment building right next door. Oh, and a Congressman that is pleading for Federal Disaster Relief a few months after voting against the same relief for the victims of Hurricane Sandy.

Bankruptcy, including Chapter 7 bankruptcy, is not the “execution” of a corporation. If a corporation were forced to liquidate as a punishment for its crimes, with the assets being seized and paid out to the victims of those crimes, THAT would be a “corporate execution”.

And if we got rid of the legal fiction that is corporate personhood, we could instead of suing corporations and getting much less money out of them than they gained from their crimes, actually prosecute the executives of those corporations and send them to prison. That would be a much greater deterrent to future crimes; the current system of merely fining corporations when they do something illegal makes it simply the cost of doing business. BP was, for example, in no way harmed sufficiently by the penalties assessed against them that it will stop them from cutting corners in drilling safety again. If, however, the CEO and board of directors had been sent to prison for murder, their successors and the executives of other oil companies would likely do everything in their power to avoid a future disaster like Deepwater Horizon.

Funny how you miss the whole point. Execution used to be delivered by the sherman anti trust act. Now that corporations are people they are immune to this action. They are in fact SUPER humans. We are unable to execute them or enforce any regulation. They pay taxes only on profits.. Imagine if we humans had to just pay on our savings (profits after expenses)??? Wouldn’t that be great.. but no we are not super humans..

Corps. aren’t executed in Texas. Execution is an act committed by someone, or thing, other than yourself. Bankruptcy is something that the entity decides to do on their own… not the state. Yours is a foolish, and politically desperate, analogy.

“For the execution of a company is known as “bankruptcy””? Huh? No Tim. Execution is a capital criminal punishment for a crime which is initiated by the state in the criminal legal system. Corporate bankruptcy is a civil action initiated by a corporation to obtain a legal status of debtor that protects it from creditors for any and all forms of collection and litigation due to financial liability. Law school 101. As far as I know, there is not a criminal punishment equivalent for corporations for corporate malfeasance such as to put corporations to death by seizing all of their shareholder assets and putting them in a special trust fund for victims.

What is the optimum level of convergence? What is the ideal range of income distribution for growth and equity is what I am getting at. There is a convergence level at which wealth is more effective over all and poverty is capable of being mostly eliminated. Capitalism as it now exists is a system that is cannibalistic of other economic possibilities – not because they are less effective but because the nature of this form of economic cannibalism is exclusivity – so that it may disease the economic system and then consume others until it kills the host. The super wealthy act as social parasites once capital has been removed from its primary role as a force of production and is instead stored up as a form of wealth bereft of social liquidity. Mort Main or the Dead Hand sets in and crushes the economic modus vivendi or improvement of living conditions for all. After an excessive period of this activity – social explosions are often the result.